Excerpt from Caponomics and The Mastery of the Patriots and Ravens

What follows is a first draft that I wrote today of an excerpt from the theories section of #Caponomics: Understanding NFL Roster Building through Super Bowl Champion Salary Cap Analysis. After posting this other excerpt, I realized I had to rethink how I approached the section as much of what I would be writing in that format would have crossover. I’ve since restructured the theories section into Front Office, QB Spending and Spending Patterns as those are the three major categories that I can fit almost everything I’ve come up with into. Continue reading Excerpt from Caponomics and The Mastery of the Patriots and Ravens »

MATT ELAM & THE AGENCY DECISION

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If you had never heard of Ravens rookie safety Matt Elam before this week, I understand you being a bit skeptical of his decision-making abilities. Calling out Calvin Johnson before a must-win game probably isn’t the best idea.

But believe it or not, Elam made the best financial decision of any rookie drafted in the 2013 class by not hiring an agent.  And given the standard 3% that most NFL agents take from their clients’ paychecks, he saved himself over $200,000 in the process.

The 2011 addition of a rookie wage scale has exhausted an agent’s ability to negotiate a rookie’s contract. Rookie contract lengths are now predetermined (all contracts are four years, while teams have a fifth year option on their 1st rounder’s), and each team has a Year One Allocation Pool & and a Signing Bonus Allocation that’s determined by where their draft selections are.

So what does this all result in? Let’s look at the first pick of the 2nd round, or the 33rd overall selection since the inception of this rookie wage scale:

NAMEYEARTEAMPICKLENGTHTOTAL CONTRACT AMOUNTSIGNING BONUSGUARANTEED MONEY
Ras-I Dowling2011NE2.1 (33rd overall)4$5,304,098$2,357,528$3,699,960
Brian Quick2012STL2.1 (33rd overall)4$5,386,599$2,357,000$3,822,373
Jonathan Cyprien2013JAX2.1 (33rd overall)4$5,469,104$2,357,528$3,916,124

Shown above are almost identical contracts for these three players who occupied the same draft slot.  Now let’s look at the last pick of the 1st round, or the 32nd overall selection.  This is where Baltimore selected Matt Elam:

NAMEYEARTEAMPICKLENGTHTOTAL CONTRACT AMOUNTSIGNING BONUSGUARANTEED MONEY
Derek Sherrod2011GB1.1 (32nd overall)4 (5th year option)$6,602,002$3,301,456$5,326,729
David Wilson2012NYG1.1 (32nd  overall)4 (5th year option)$6,683,979$3,301,456$5,382,979
Matt Elam2013BAL1.1 (32nd overall)4 (5th year option)$6,767,002$3,301,456$5,439,229

Again, the contracts are almost exactly the same.  While all three players received identical signing bonuses, it was actually Elam, who was representing himself, that received the most in both total and guaranteed money.

Elam has stated that he plans to hire an agent for his second NFL contract, where negotiations aren’t nearly as cut and dry. And with the way the sports agency industry works today, agents certainly do more than just negotiate contracts. They often pay for their clients’ pre-combine training, help with financial planning, and even guarantee future marketing revenue in certain cases.

With college bowl season around the corner, players will begin choosing their agents in bunches. It will be interesting to see if any incoming rookie attempts to save himself money by following Elam’s lead after Elam proved successful in negotiating his rookie contract.

Andrew Cohen
@ajcohen03
ajcohen3@gmail.com 
 
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Per LaCanfora: Jaguars and Cardinals Prepaid Money Before Trades

According to Jason LaCanfora the Jacksonville Jaguars and Arizona Cardinals both pre-paid significant portions of Eugene Monroe’s and Levi Brown’s salaries to facilitate a trade to the Baltimore Ravens and Pittsburgh Steelers respectively.

This makes the trades much more reasonable for the capped out Steelers and Ravens, whose trades at full prices for these players made little sense. Based on LaCanfora’s tweets my assumption is that the teams have reduced the base salaries to the mandated CBA minimums which should actually result in larger bonuses being paid by the original teams.

In the case of Brown he will have earned 4 weeks of salary at a rate of $4.75 million and the remaining weeks at a base of $715,000. His effective salary will be $1.76 million, meaning the Cardinals should have paid a bonus of $3.086 million to make the contract whole. Teams can not use any bonus mechanisms during the season to avoid proration treatment of these prepayments, unless they were to void the remaining years of the contract. What that means is that the Cardinals should now carry a dead money charge in 2014 of $6,514,191 for Brown. His final cap charge in 2013 for the Cardinals should be $3,539,044. The Steelers should only be responsible for $546,765 in salary cap charges for 2013, making the cap effect of trading for him almost negligible. The signing of Brown looks to have been a disaster for the Cardinals based on the financials now.

In Monroe’s case he will earn $715,000 for the remaining 13 weeks of the season and will have earned $894,118 prior to the trade. It is likely that the Jaguars paid him $2,359,117 in a bonus, half of which should count in 2013 and half in 2014, unless the 2014 season was void allowing it to all accelerate into 2013. Considering Monroe’s contract was set to void it is possible that the Jaguars could have done this rather than carrying dead money in 2014. At worst they will now carry $2.577 million in dead charges for Monroe in 2014. The Ravens should only be responsible for $546,765 in cap charges.

When the trades are made official and the true cap numbers come in we’ll get the correct figures in for both players rather than the guesswork contained in the post.

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Jaguars Trade Eugene Monroe to the Ravens

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The Jaguars, according to multiple sources, have traded starting left tackle Eugene Monroe to the Baltimore Ravens for draft picks.  Monroe is scheduled to be a free agent after this season and thus could simply be a one year rental for the Ravens who seemed to be desperate to find help along their offensive line. Monroe was earning a base salary of $3.8 million this season so the Ravens will be responsible for $2,905,882 in both cash and cap commitments. Monroe’s bonus money will remain with the Jaguars and they will carry a dead money charge of $1, 397,500 for Monroe in 2014.

The remaining cap figure likely means that the Ravens will need to make roster moves in order to fit Monroe under their salary cap. As of Monday the Ravens only had $1.2 million in cap space. They freed up  $367,059 with the release of Christian Thompson this afternoon and will free up slightly more when a roster move is made to add Monroe to the roster. I would imagine that maybe S Jeromy Miles could be in danger because his contract is not guaranteed and he would save the team $933,882 in cap room. Any player released will be paid his salary for the week. Still that will not be enough to fit Monroe.

The Ravens have walked a tight rope with their salary cap recently and have little areas for restructures as many players already have significant prorated bonuses and low base salaries comprising their cap numbers. The options would likely be restructuring the contracts of either Terrell Suggs, Haloti Ngata, or Marshal Yanda to create the cap room. Another option would be to restructure the contract of Monroe upon executing the trade. Monroe has a voidable 2014 year which would allow the team to move prorated money from 2013 into 2014 for cap purposes. Signing Monroe long term will likely require some creative thinking on the part of the Ravens to fit him in their salary cap structure.

For the Jaguars this was basically a salary dump. Monroe no longer fit into the teams long term plans and they were most likely not going to re-sign him after the season. From their point of view they will receive immediate draft picks in 2014 plus a cap and cash savings of $2.9 million in 2013, which can be carried over to future years. At the end of the day this is probably similar to a baseball trade where you simply get whatever assets back for a player that you can.

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View Eugene Monroe’s Contract and Salary Cap Page

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Jameel McClain Renegotiates Contract With Ravens

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ILB Jameel McClain has taken a $1.5 million dollar paycut from the Baltimore Ravens. McClain has been recovering from a spinal cord injury and had been placed on the Active/PUP list by the Ravens at the start of training camp. McClain was expected to be a starter this season but with health questions and a relatively tight salary cap figure the Ravens likely identified him as a perfect candidate for a renegotiated contract with his status for the year up in the air.

At this time I don’t know if they added any incentives to his contract or guaranteed his salary for the season.  If I find out any more details on the contract I’ll update this post. The Ravens now have around $5.5 million in cap space.

View Jameel McClain’s Salary Cap and Contract Page

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Best & Worst Contracts: The Baltimore Ravens

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A few weeks ago Jason LaCanfora published a list of best and worst contracts in the NFL so I thought it might make a good idea for us to do the same here at OTC, with a team by team approach. I’ll try to be a bit more analytical in terms of why money was paid and how it fits in the market, but the general premise is the same. The one key difference is outside of restructured rookie contracts under the old CBA we will only use veteran contracts as there is a big difference between best draft picks and best contracts.  Please note that there is a difference between a bad player and a bad contract when discussing some of the selections. Clicking on a players name will take you to his salary cap page.

Marshal YandaBest Contract: Marshal Yanda

The Ravens have some interesting deals on the books. They get lower guarantees to help drive the price down but in return will structure deals in a way that are cap friendly on the front end but more difficult to move on from at the end. Yanda’s contract didn’t originally fit into that structure giving the team tremendous flexibility with a really good player. They restructured his contract in 2012, but even then maintained a structure that was still team friendly at the backend.

Yanda is one of the best Guards in the NFL and one of those players that brings the Ravens their identity. Yanda is just a nasty physical player that sets the tone for his team and a game with his play in the trenches. He can fill in at tackle if needed which only increases his value to the team. Guards don’t often get much notoriety unless they block for an explosive offense, but Yanda deserves it.

At $6.4 million a year his contract ranks 10th among Guards. He is better than every player making more money than he is at the position. The Ravens took higher backend cap charges following the restructure allowing them to account for low cap allocations in 2011 and 2012, but even in 2013 his cap charge is only 4th in the NFL at the position. More importantly if his play declined the contractual structure allows them to walk away from the backend higher charges if they need to, charges which are not cap killers in the first place. It is just a nice team friendly contract below the market value of a really good player.

Joe FlaccoWorst Contract: Joe Flacco

While it’s no secret that I think Flacco is grossly overpaid based on his performance it’s fair to say that this is the nature of the position. But even that does not excuse a contract just filled with explosive for the Ravens that has the potential to cripple the franchise for seasons if Flacco does not make the same leap other young Quarterbacks made after Super Bowl wins propelled them to fortunes.

Flacco will carry a cap charge of $28.55 million in 2016, an unreasonable figure barring a gigantic leap in salary cap limits for a team. The Ravens can’t move on from him at that point either- his dead money charge is nearly $26 million. Even if he were to fail to live up to the lofty expectations of his contract the Ravens are already locked into $10.55 million in prorated charges in both 2016 and 2017. With $15.3 million in dead money in 2017 it more or less locks the Ravens into a second extension with Flacco that will see a price based on cap leverage as much as skill.

How high are those dead money charges?  In Eli Manning’s similar record setting deal he carried dead money charges of $12.7 million and $7.6 million in the 4th and 5th years of his contract.   Those numbers represented 13% and 7.8% of his overall contract charge and 77% and 41% of his cap charges in those seasons. Flacco’s numbers represent 21.4% and 12.7% of the overall deal and 90% and 49% of his cap figures. It’s a great contract for the player, perhaps the best in the NFL. For the team it’s a mess just waiting to happen.

Check out Our Other Best & Worst Contract Articles

AFC East: Buffalo BillsMiami DolphinsNew England PatriotsNew York Jets

AFC North: Baltimore Ravens, Cincinnati Bengals (June 29)

What Teams Will Gain in Cap Space with the June 1 Cut

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With June 1 rapidly approaching I thought this would be a good time to update on the salary cap changes that will occur for a number of teams as well as some other thoughts on the subject. On June 1 the league changes their accounting rules for acceleration of prorated bonus money. If a player is cut prior to June 1 all of a players unaccounted for bonus money accelerates onto the salary cap. If a player is cut after June 1 the players unaccounted for money accelerates to the following season (in this case 2014) with only his current proration remaining on the 2013 cap books.

The NFL allows teams to cut up to two players prior to June 1 and designate them “June 1 cuts”. If this mechanism is used the team carries the players’ full cap charge in their top 51 until June 1. On June 2 the player is officially removed from the roster with only his current years proration remaining on the books and in many cases a dramatic increase in cap space for cap starved teams that need to sign rookies or have money on hand for in season roster management. 10 teams utilized the June 1 designation, with the Dolphins being the only team to use it on two players.

For many of the teams the money is desperately needed. The Oakland Raiders have yet to sign a draft pick as they remain right around the NFL’s cap limit, but on June 2 their cap will grow to about $7.86 million after Michael Huff drops off the books. The Steelers with almost no breathing room and less than $600,000 in cap room with 4 picks to sign will now have $5.59 million to spend, due to the June 1 treatment of Willie Colon. The Chargers, the other cap strapped team with less than $1 million in room, will remove Jared Gaither to jump to $4.65 million in cap space.  The other teams with limited cap funds that will benefit from the June 1 rule are the Falcons and Ravens, both of whom currently have around $2 million in cap space.

Other teams such as the Bills and Dolphins will see large increases that will jump them very close to the top of the NFL in cap space. The Dolphins will jump from 15th to 7th in the NFL in cap space while the Bills will go from 7th to 5th. This is primarily because of the large cap investments that the teams’ made in mediocre players. Ryan Fitzpatrick current sits as the 2nd largest cap charge on the Bills active roster while Karlos Dansby has the highest cap figure of any Dolphin. Huff of the Raiders also ranks as the highest cap charge on his team.

Most of the players are all good enough to find another job in the NFL, only Gaither has not found a team willing to take him, but only 5 received multi-year contracts and the highest cap charge to be found is Tyson Clabo, now of the Dolphins, at $3.5 million. The June 1 rule really illustrates the mistakes that teams make when valuing players and structuring contracts. While Dansby, Huff, and Fitzpatrick were outrageous figures, 6 of the June 1 cuts still take up a top 5 cap spot on the active roster and 9 are in the top 10. The following table shows the amount of estimated cap space that was to be spent on these players, dead money the teams will carry, and how much cap new teams are going to pay these players this season:

Category

Total

Original Cap Charge

$70,563,750

2013 Dead Money

$19,413,750

2014 Dead Money

$36,883,750

New Team 2013 Cap

$18,088,750

So the cutting teams will carry more dead money this year than the players will collectively make from their new teams to play in the NFL. The league valued these players at 74.3% less than the teams original projections. Assuming that the average salary for the group in 2014 is $1 million each then those players will play football over a 2 year period for 50% less than the dead money totals that the original teams will now carry in 2013 and 2014. That’s one of the reasons why when we do some of the valuations on the site from a team perspective we try to take into account future productivity as this was, for the most part, money thrown away on players. These are the type of contracts that get General Managers fired over the long run.

As for the June 1 cuts themselves here is the list of players that will be removed on June 2 and what the projected cap totals for the teams will be based on the official salary cap numbers as of May 28, 2013.

PlayerTeam

Current Charge

New Charge

Savings

New Team Cap Space

James AndersonPanthers

$4,400,000

$1,400,000

$3,000,000

$9,793,115

Michael HuffRaiders

$11,288,750

$3,288,750

$8,000,000

$7,857,320

Bernard PollardRavens

$3,250,000

$750,000

$2,500,000

$4,303,573

Ryan FitzpatrickBills

$10,450,000

$3,000,000

$7,450,000

$19,027,240

Karlos DansbyDolphins

$8,575,000

$2,325,000

$6,250,000

$17,949,298

Kevin BurnettDolphins

$5,700,000

$1,250,000

$4,450,000

$17,949,298

Willie ColonSteelers

$7,650,000

$2,150,000

$5,500,000

$5,590,098

Jared GaitherChargers

$6,500,000

$2,000,000

$4,500,000

$4,645,848

Tyson ClaboFalcons

$6,050,000

$1,550,000

$4,500,000

$6,437,723

Marcus SpearsCowboys

$2,700,000

$700,000

$2,000,000

$9,695,234

Adam SnyderCardinals

$4,000,000

$1,000,000

$3,000,000

$10,792,654

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